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Midterm Elections | A + or - for Investors?

Midterm Elections | A + or - for Investors?

November 10, 2022

What does history teach us about the effect Midterm Elections have on the stock market?

Regardless of our political affiliation, we, as investors, are looking ahead to the coming midterm election and what impact the results might have on the stock market.

David Ryan, a three-time U.S. Investing Champion, is a longtime portfolio manager under IBD founder Bill O'Neil. David has said that the stock market historically has performed best when there's Washington gridlock. "According to data referenced by Ryan, from 1977 to 2019, the stock market's best performance came during times when control of Congress is split between Republicans and Democrats, rather than complete Democrat control or complete Republican control." (Coram, 2022)

Investors have had it rough this year. For example, higher inflation rates have impacted stocks and bonds, which we haven't seen in years, complications with congested supply chains, and worries about wars worldwide. This year's bear market has added to the confusion regarding selecting who should hold political positions. But as David Ryan points out, a balanced congress has typically seen the best results for the market. 

As we look toward the future and beyond the midterm elections, let's look at what has historically happened to the stock market after the midterm elections. From 1950, the S&P 500 Index returned on average 15.1% in the year following the midterm election versus 7.1% for all other years. Historically the S&P 500 Index has returned positive returns in 18 post-midterm years, with double-digit returns 13 times.


While history does not predict future results, let us remember a famous quote. "History doesn't repeat itself, but it often rhymes." Author: Mark Twain

It is an excellent time to look to the future with an approving eye. Focusing on what you can be thankful for, your family, friends, co-workers, and the people and activities that enrich you daily. 

Don't hesitate to contact our office with questions or concerns regarding your accounts. 

Thank you for your continued trust and confidence. We are THANKFUL for you and wish you a very abundant holiday season. 

David S. Dixon, CFP

Jacob S. Bierstedt, CFP®, ChFC®